Oil Prices Fall as Middle East Tensions Ease
Oil prices extended losses on Friday and were on track to post their first weekly drop since November, as tensions between the US and Iran eased.
West Texas Intermediate futures fell by 0.2% to $59.41 per barrel. Brent crude oil futures declined by 0.1% to $65.27 per barrel.
The improving situation in the Middle East also weakened the demand for precious metals.
Gold futures were down 0.1% to $1,552.75 per troy ounce. Hitting a seven-year high of $1,611 on Wednesday, following Iran’s missile attack at two Iraqi military facilities housing US forces.
The yellow metal has lost nearly 4% from this week’s peak.
Oil Prices’ Rally Halts on Cooling US-Iran Tensions
Oil prices have paired gains in the past two days since the cooling US-Iran conflict lessened investors’ fears of a supply disruption in the Middle East. This triggered a selling period in energy commodities.
The Democratic-led US House of Representatives has approved a resolution on Thursday that would prevent US President Donald Trump from further escalating tensions with Iran.
The measure limits Trump’s ability to call for further military action in the Middle Eastern country without the consent of Congress, under the War Powers Resolution of 1973.
The resolution passed the House 224-194, with almost all Democratic congressman voting for the motion, and the Republicans opposing it.
The de-escalation of the dispute between the two nations also overshadowed fresh developments on the US-China trade deal. This helped lift oil prices.
China’s Vice Premier Liu He, head of the negotiation team in the trade discussions with the US, will sign the Phase 1 deal next week. The spokesman for the Commerce Ministry Gao Feng shared this information.
Liu is set to travel to Washington between January 13 and 15 to sign the agreement. According to Feng, adding that he has no more information to reveal about the talks, other than that both parties remain in touch.
The US is expected to cease plans for new tariffs and cut some existing duties on Chinese imports. While China will raise agricultural buying as part of the Phase 1 deal reached in December.
Trump has also stated that he would later visit Beijing to start discussions about a Phase 2 trade agreement.
Adding pressure on the energy commodities complex was Wednesday’s weekly US oil stockpile data.
The Energy Information Administration reported that crude inventories grew by 1.2 million barrels for the week ended January 3. In contrast to forecasts for a loss of 3.6 million barrels.
Gasoline stocks also surged by 9.1 million barrels, against expectations for an increase of 2.7 million barrels.
Distillate inventories were up by 5.3 million barrels, versus market forecasts for a rise of 3.9 million barrels.
